Exhibit 99.1
S.Y. Bancorp Announces Record Third Quarter Results, as Net Income
Increases 18% to $5,851,000 or $0.41 Per Diluted Share
LOUISVILLE, Ky.--(BUSINESS WIRE)--Oct. 19, 2005--S.Y. Bancorp, Inc.
(NASDAQ: SYBT) (formerly listed on the Amex under the ticker SYI), the parent
company of Stock Yards Bank & Trust Company in Louisville, southern Indiana and
Indianapolis, today reported record results for the third quarter and nine
months ended September 30, 2005. The Company's higher earnings for the periods
reflected increased net interest income driven primarily by improved net
interest margin along with ongoing loan growth. Steadily improving asset quality
also had a positive impact on net income as a continued improvement in credit
quality metrics made it unnecessary for the Company to record a provision for
loan losses in the third quarter. Additionally, sources of non-interest income
continued to rise as the Company sustained strong performance in its investment
management and trust operations, while it also reported higher income from
brokerage and mortgage lending. A summary of results for the third quarter and
year-to-date period follows:
Quarter ended September 30, 2005 2004 Change
- --------------------------- ----------- ----------- ------
Net income $ 5,851,000 $ 4,971,000 17.7%
Net income per share, diluted $ 0.41 $ 0.35 17.1%
Return on average equity 18.77% 17.90%
Return on average assets 1.83% 1.71%
Nine months ended September 30, 2005 2004 Change
- ------------------------------- ----------- ----------- ------
Net income $16,120,000 $13,998,000 15.2%
Net income per share, diluted $ 1.14 $ 0.99 15.2%
Return on average equity 17.90% 17.44%
Return on average assets 1.71% 1.65%
"We are pleased to announce these record results for the third quarter,
which extend the Company's track record for increased earnings and
industry-leading performance," said Chairman David P. Heintzman. "Third quarter
earnings were fueled by ongoing growth in our core bank businesses, especially
in the area of new business development, which demonstrates real traction from
the recent changes we made in both commercial and small business relationship
management. Importantly, increased loan volume from these areas helped offset
some of the usual runoff to be expected in our competitive environment and our
intentional efforts to reduce our exposure to certain higher risk relationships.
Strong results from Stock Yards Trust Company also continued to drive our growth
in non-interest income, complementing the positive earnings impact of higher
margins and improving credit quality. Together, these factors combined to
generate solid results for the quarter and first nine months of the year,
including another period of strong returns on average equity and assets. In
fact, virtually all measures of our financial and operational performance for
the third quarter registered improvements against the second quarter of 2005 as
well as the same quarter last year."
Heintzman said the Company was gratified to see continuing signs of
excellent credit quality, including a significant reduction in non-performing
loans from the second quarter. The amount of the Company's non-performing loans
hit its lowest level in four years, which is even more impressive considering
the loan portfolio has increased more than 50% during that same time period. The
Company's evaluation of credit quality and risk, together with improved credit
metrics and continued low levels of net charge-offs, again enabled it to forego
a provision for loan losses in the third quarter. While the Company recognizes
that credit risk remains an inherent part of its business and can represent a
significant challenge to profitability, it remains confident that the Bank has
properly identified and provided for potential risk in the loan portfolio as of
September 30, 2005. The Company also notes that its allowance for potential loan
losses remains very strong from a historical standpoint and in comparison to the
level of non-performing loans now in the portfolio.
Concluding, Heintzman stated, "We are excited about the Company's solid
performance in the first nine months of the year and believe that our strong
focus on customer service will continue to benefit both our core bank businesses
and other areas, including trust, brokerage and mortgage. The complementary
nature of our operations - this synergy in our business lines - continues to
drive an impressive performance, one that is among the best in the regional bank
sector. We remain focused on developing all business areas and maintaining our
diverse revenue stream, which has been key to our strong and consistent results
for shareholders, and we expect these ongoing strategies will help lead us to
another year of record results for 2005."
Net interest income, the Company's largest source of revenue, increased 16%
in the third quarter and 10% for the first nine months of 2005 versus comparable
2004 periods, driven primarily by improved net interest margins combined with
growth in loans - the Company's most significant earning asset. Net interest
margin for the third quarter, which increased to 4.35% as the Company was able
to hold down deposit costs even as market interest rates increased, reflected an
improvement of 11 basis points from the second quarter of 2005 and a
24-basis-point increase from the same quarter last year. Net interest margin for
the first nine months of the year, at 4.22%, was up one basis point from the
year-earlier period, primarily because the upturn in the third quarter 2005 more
than offset lower comparable margins in the first two quarters of the year.
Although the Company believes it remains well positioned for a rising interest
rate environment, future increases in rates by the Federal Reserve may have an
adverse impact on future margins as increased competitive pressure in deposit
and loan pricing may more than offset the positive impact of asset repricing.
Depending on expected asset repricing and such factors as competitive rate
pressures or unforeseen changes in the Company's funding mix, the net interest
margin could experience some slight contraction during the next quarter.
As in the second quarter of 2005, the Company made no provision for loan
losses in the third quarter of 2005, which resulted in an 85% decline in the
provision for the nine months ended September 30, 2005, compared with the same
period in 2004. Non-performing loans fell approximately 23% from both the
year-ago level and the second quarter of 2005. Net charge-offs were down 57% for
the quarter and 33% year to date compared with the same periods of 2004. The
amount of the quarterly provision for loan losses is calculated in response to
these and other factors, and ultimately relies upon an overall internal analysis
of the amount of risk in the loan portfolio. Based on this detailed analysis of
credit risk, management considers the allowance for loan losses adequate to
cover losses inherent in the loan portfolio as of September 30, 2005.
Non-interest income increased 9% for the third quarter and year-to-date
period ended September 30, 2005, compared with the same periods in 2004,
primarily due to increases in investment management and trust income. Investment
management and trust income was up 11% for the quarter and 15% for the
year-to-date period compared with the same periods in 2004. Assets under
management, at approximately $1.4 billion, were up 12% compared with the level
one year ago, an increase that had a direct effect on investment management and
trust income for the quarter. The trust company continues to add new and
profitable relationships, driven in part by its strong investment management
results. Also contributing to the growth of non-interest income were increases
in revenue from bankcard transactions of 29% and 39%, respectively, for the
third quarter and year-to-date period versus comparable 2004 periods, because of
the growing use of these services by customers. Brokerage revenue grew
approximately 44% for the quarter compared with the prior year as that
department again reported solid gains in the quarter, aided in part by the
comparison to a relatively slow quarter last year as well as the addition of a
new broker since September 2004. This pace continued a strong year for the
brokerage area as revenue was up 23% for the year-to-date period. Gains on sales
of mortgage loans held for sale rose 38% in the third quarter compared with the
prior year as the mortgage company had a solid quarter compared with a weaker
quarter in 2004. For the year-to-date period, gains on the sales of mortgage
loans held for sale were up 16% compared with the prior year. Offsetting higher
non-interest income in several areas, service charges on deposit accounts
declined 4% in the third quarter and 7% for the first nine months of the year on
a comparable basis. Several factors contributed to the decline, including lower
activity levels, the impact of free business checking, and the effect of higher
interest rates on commercial analysis accounts.
Non-interest expenses increased 13% for the quarter and 11% for the
year-to-date period compared with the same 2004 periods. An approximate 16%
increase in salaries and benefits for the quarter and 11% for the year-to-date
period reflected the addition of professional staff in new and existing
locations, along with annual compensation increases. Additionally, these
comparisons were affected by lower-than-normal benefits expense in the third
quarter of 2004 due to better-than-expected claims experience in the Company's
self-funded health care plan. Net occupancy expense was up 11% for the quarter
and 17% for the first nine months of 2005, largely as a result of the opening of
new facilities during the third quarter of 2004. Data processing expense
increased 5% for the quarter and 8% year to date due to ongoing investments in
upgraded equipment and systems as the Company continues to improve its
infrastructure in support of current and anticipated growth. Finally, the
Company's state bank taxes increased 124% for the quarter and 50% for the
year-to-date period as the Company re-evaluated its state and local tax accruals
during the quarter and adjusted its expense accordingly.
Income tax expense increased 19% for the quarter and 12% for the
year-to-date period. The effective tax rate for the third quarter of 2005 was
32.0% compared to 31.7% in 2004. The effective tax rate for the first nine
months of 2005 was 31.3% compared with 32.0% in 2004.
Total assets for the third quarter increased 7% to $1.27 billion from $1.19
billion at the end of the third quarter of 2004. Loans increased 10% over the
year-earlier level primarily due to strong loan growth in the latter part of
2004 and steady, but more moderate growth in 2005. Deposits increased 8% from
September 30, 2004, as the Company has seen steady growth in the deposit
portfolio over the last 12 months.
S.Y. Bancorp, Inc., which trades on the NASDAQ under the symbol SYBT, was
incorporated in 1988 as a bank holding company in Louisville, Kentucky. It is
the parent company of Stock Yards Bank & Trust Company, which was established in
1904 and has locations in Louisville and southern Indiana, as well as a branch
in Indianapolis. S.Y. Bancorp, Inc. is also the parent company of S.Y. Bancorp
Capital Trust I, a Delaware statutory business trust that is a 100%-owned
finance subsidiary. The Company's Trust Preferred securities are listed on the
Amex under the symbol SYI PR.
This report contains forward-looking statements under the Private
Securities Litigation Reform Act that involve risks and uncertainties. Although
the Company's management believes the assumptions underlying the forward-looking
statements contained herein are reasonable, any of these assumptions could be
inaccurate. Therefore, there can be no assurance the forward-looking statements
included herein will prove to be accurate. Factors that could cause actual
results to differ from those discussed in forward-looking statements include,
but are not limited to: economic conditions both generally and more specifically
in the markets in which the Company and its subsidiaries operate; competition
for the Company's customers from other providers of financial services;
government legislation and regulation which change from time to time and over
which the Company has no control; changes in interest rates; material unforeseen
changes in liquidity, results of operations, or financial condition of the
Company's customers; other risks detailed in the Company's filings with the
Securities and Exchange Commission, all of which are difficult to predict and
many of which are beyond the control of the Company.
S.Y. Bancorp
Summary Unaudited Financial Information
(in thousands except per share amounts)
Third Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net interest
income $ 12,728 $ 10,928 $ 36,128 $ 32,919
Provision for
loan losses -- 180 225 1,490
---------- ---------- ---------- ----------
Net interest income
after provision
for loan losses 12,728 10,748 35,903 31,429
Non-interest
income 6,818 6,235 20,184 18,475
Non-interest
expense 10,939 9,702 32,634 29,332
---------- ---------- ---------- ----------
Net income before
income taxes 8,607 7,281 23,453 20,572
Provision for
income taxes 2,756 2,310 7,333 6,574
---------- ---------- ---------- ----------
Net income $ 5,851 $ 4,971 $ 16,120 $ 13,998
========== ========== ========== ==========
Net income per
share
Basic $ 0.42 $ 0.36 $ 1.16 $ 1.02
Fully diluted $ 0.41 $ 0.35 $ 1.14 $ 0.99
Weighted average
shares
outstanding:
Basic 13,875 13,843 13,910 13,760
Fully diluted 14,102 14,192 14,136 14,153
Sept. 30, Dec. 31, Sept. 30,
2005 2004 2004
---------- ---------- ----------
Total assets $1,273,372 $1,212,015 $1,192,743
Total loans 1,024,839 984,841 932,812
Non-interest bearing
deposits 175,562 159,342 164,925
Interest-bearing deposits 818,859 790,741 757,092
Stockholders' equity 123,423 116,647 113,510
Book value per share 8.91 8.36 8.18
Unaudited supplemental financial information for the third quarter and nine
months ended September 30, 2005 and 2004, may be obtained by following this
link: http://www.irinfo.com/sybt/3q05fsm.pdf.
CONTACT: S.Y. Bancorp, Inc.
Nancy B. Davis, 502-625-9176